Monthly Archives: July 2012

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On August 1 in New York, Partner Howard Altarescu will participate in a roundtable discussion hosted by Agrion relating to securitization and other financings of solar contracts. For more information, please click here. Please contact Ania Mirek at amirek@orrick.com if you are interested in attending, and comply with the criteria that you are a “non-member who has never attended an AGRION event previously.”

On July 23, ESMA announced that an open hearing will take place on the draft Guidelines on sound remuneration policies under the Alternative Investment Fund Managers Directive (“AIFMD”). The draft Guidelines form the consultation process and were published on June 28. The hearing will cover the scope of the proposed Guidelines. Agenda.

The hearing will take place at ESMA’s offices in Paris on September 25 and is open to all members of the public.

On July 24, the FSA published the final notice issued to Stephen Goodwin, a commercial insurance broker at S Goodwin & M Best, which has now ceased trading. Final Notice.

The FSA found that between November 2008 and November 2010, when the firm was in financial difficulties, Mr. Goodwin and his partner (now deceased) retained a number of insurance premia from clients which they did not pay to insurers and intermediaries. Three clients suffered financial loss as a result of this. One client discovered they were not insured, and two clients paid the same premium twice to ensure their policies remained in force.

Mr. Goodwin was fined £471,846 for falling short of the required standards for approved persons in respect of honesty and integrity. This was made up of a disgorgement payment of £303,846 and a punitive payment of £168,000. This is one of the largest fines levied on an individual for insurance fraud, and sends out a clear message regarding the FSA’s credible deterrence policy. Mr. Goodwin was also banned from performing any function relating to a regulated activity carried on by an authorised or exempt person or exempt professional firm.

On July 23, Spain, Italy and Greece introduced new temporary bans in relation to short selling in response to the recent extreme volatility in the European financial markets.

The Comisiòn Nacional del Mercado de Valores (“CNMV”) has decided to ban short selling on Spanish regulated markets with immediate effect. The ban will apply for three months until October 23, although CNMV may choose to extend it for a further period.

The Commissione Nazionale per le Società e la Borsa (“CONSOB”) announced a ban on short selling in respect of shares of certain companies in the Italian banking and insurance sectors that will last from July 23 to July 27.

In addition, on July 24, Greece’s Hellenic Capital Market Commission (“HCMC”) announced an extension to the current short selling prohibition on the Athens Stock Exchange for an additional three months until October 31. Press Release.

For further details, please see updated version of the European Securities and Markets Authority (“ESMA”)’s table of members’ short selling measures. Updated Version.

On July 23, the FSA published a press release announcing that six people have been convicted of offences of disclosure of inside information and dealing whilst in possession of confidential and price sensitive information in respect of six companies’ stocks. A seventh defendant, was acquitted of insider dealing. Press Release.

Between May 2006 and May 2008, the defendants obtained confidential and price-sensitive information from investment banks concerning proposed or forthcoming takeover bids. They then used this information to place spread bets ahead of those announcements knowing that when the information became public knowledge the price would rise. The defendants made a combined profit of £732,044.59. This was the longest and most complex prosecution brought by the FSA to date. On July 27, the six defendants were sentenced to jail for a total of 16 years.

On July 23, Judge Barbara Kapnick of the Supreme Court of the State of New York approved the withdrawal of Walnut Place LLP’s opposition to Bank of America’s $8.5 billion settlement with holders of Countrywide RMBS. In its motion to intervene in the settlement, Walnut Place alleged that the trustee, Bank of New York Mellon, had not properly disclosed the settlement negotiations or kept the investors informed, and that the investors who took the lead in negotiating the settlement were improperly biased due to “substantial ongoing business relationships” with Bank of America. Decision.

On July 17, Judge Denise Cote of the United States District Court for the Southern District of New York ruled that the Federal Housing Finance Agency (“FHFA”) can pursue certain RMBS-related claims against affiliates of Residential Capital LLC (“ResCap”). ResCap, which has filed for Chapter 11 bankruptcy, brought a motion before Judge Cote to enjoin the FHFA from pursuing claims against ResCap’s non-debtor affiliates or, in the alternative, to extend the automatic stay protection afforded by its Chapter 11 status. Judge Cote denied ResCap’s motion. The underlying FHFA complaint alleges that defendants (including Ally Financial, Ally Securities, and GMAC Mortgage) made false or misleading statements or omissions in the offering materials for $6 billion worth of RMBS. Decision.

On July 25, Deutsche Zentral-Genossenschaftsbank AG (“DZ Bank”) filed a summons with notice against several UBS entities in the Supreme Court of the State of New York. DZ Bank alleges that UBS misrepresented the underwriting standards used to originate mortgage loans underlying RMBS that DZ Bank purchased for more than $160 million. DZ Bank also alleges that UBS’s offering materials misrepresented information about the legal validity of the trusts and the transfer of loans into the trusts. DZ Bank brings claims for common-law fraud, fraudulent inducement, negligent misrepresentation, aiding and abetting fraud, declaratory judgment, and contract claims, including rescission, restitution, and mutual mistake. Summons with Notice.

On July 23, Judge Marsha Pechman of the United States District Court for the Western District of Washington denied Washington Mutual’s motion for summary judgment. Plaintiffs allege that Washington Mutual misrepresented the extent to which its underwriting guidelines were lowered and unevenly applied in connection with the sale of RMBS, including that the underwriters at Washington Mutual had substantial discretion to deviate from the already lowered guidelines. Judge Pechman held that the plaintiff class raised a genuine dispute as to whether the statements in the offering documents were false and misleading based on alleged systematic deviation from underwriting guidelines. Decision.

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